Investment Trusts  

Lack of demand foils Buffettology trust’s £100m IPO plans

Lack of demand foils Buffettology trust’s £100m IPO plans
 Credit: Simon Dawson/Bloomberg

Sanford Deland Asset Management has cancelled plans to float a UK Buffettology Smaller Companies trust after failing to attract the required level of funding.

In an update to the stock exchange today (October 26), the board said it had taken the decision not to proceed with an initial public offering at the current time.

It said: “The company has received a broad level of support from a significant number of investors and has been encouraged with the response to the investment proposition.

“However, overall demand has not been sufficient to meet [the requirements].”

Sanford Deland announced it was looking to raise at least £100m for the trust last month (September 25).

Set to be managed by chief investment officer Keith Ashworth-Lord, the trust was to float at £1 per share and follow the philosophy of business perspective investing.

The strategy, closely associated with US star fund manager Warren Buffett, starts from the premise that there is no distinction between part ownership — like buying shares in a company — or outright ownership.

Sanford DeLand already runs the UK Buffettology and Free Spirit funds under the same principles, both of which are in the top 10 performing portfolios in the UK All Companies sector over the past three years.

At the time, Mr Ashworth-Lord said: “We believe that the UK small cap market will continue to offer excellent investment opportunities to experienced managers who know what to look for and have the freedom to take a long-term view.

“The structure of a closed-ended investment trust, rather than an open-ended fund, means that many of the liquidity concerns over investment in smaller quoted companies can be addressed.”

It is not the first investment trust float that has failed to meet the required level of funding in recent times.

Earlier this month (October 8), the Tellworth British Recovery and Growth trust did not raise the £100m it needed for its IPO and cancelled its launch.

Tellworth stated: “While the investment proposition and investment team have been very well received by discretionary wealth managers and intermediary retail platforms, the overall level of demand was insufficient to meet the minimum fund size.”

imogen.tew@ft.com

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